Channel Development
Experiences and thoughts

Exploring new virgin and risk-free seas as a way to increase net profit

Tuesday, March 11, 2008

I know several people that are thinking about the option of starting up a new company to develop an ERP business practice. My suggestion to them would be, not considering some minor exceptions, to definitely think twice before partnering with a proprietary vendor. The CeBIT is over. It was an exhaustive and intense 6-day fair. As expected, we took back home several different memories with us. However, there is one which I would somehow call “surprising”: at the stand for one of the top proprietary ERP vendors I saw two sales representatives “fighting” each other and discussing about who should be the one to talk to the end-client even before listening to the end-client needs. Obviously, each sales representative was defending a different solution. Next to them, some other partners were fiercely competing with peers to attract the attention of end-clients passing by with the main goal of being elected as one of the four or five parties that would probably meet each other in the next phases of the evaluation.

I perfectly “understand” why do IT consultancy companies stay “loyal” to their proprietary vendors: they are making a lot of revenues thanks to the licenses end-clients are paying to be eligible to use vendor’s software! However, they usually struggle when trying to make their practice grow year-over-year or trying to get more than just a 5% profit margin. Why not considering an alternative or a compliment that would easily help them to skyrocket their revenues and margins? Professional and competitive Open Source ERP solutions are already a reality that cannot be denied, but there is still an incomprehensible fear and reluctance to adopt these. I am amazed to see that most partners of proprietary vendors still prefer to swim in a red ocean infested of sharks rather than to explore new virgin and risk-free seas. Should not the second option be far more attractive than the first one? Just a thought…